Strategic of H&M

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Competitive environment analysis: H&M

Introduction

We chose to write our report about H&M for many different reasons. First of all, even if we focus on the French market, the fact that H&M is a global brand, operating from nearly everywhere in the world, both made us sure that we would have to analyze a very strong and efficient strategy, and to face some difficulties, deeply linked with the industry (such as problems of relocations or competition from Chinese textile) that would help us understand a strategy better.

Besides fashion is an unavoidable factor of our daily life. It always seemed interesting to analyze what stands behind the doors of a store in which we shop.

Presentation of the brand

H&M is a Sweden based company. It was funded in 1947 by two Swede Hennes and Mauritz, which gave the brand their name. The firm designs, produces and retails clothing items and accessories (including cosmetic products). Its range of product includes clothing (innerwear and sportswear) for men, women and children.

Presently, H&M operates in 28 countries. Its largest/major markets are in Germany, Sweden and the UK. The company also allows its customers to buy on the Internet through their online shop (not available in all countries.)

H&M reflects international trends through different concepts and ranges of clothes that cover different “style” with above all classics, basics and a line depending on international trends.

The brand’s largest department is the women’s department (followed by children’s wear). Almost all H&M stores are full-range stores, although some stores sell only women’s wear or children’s wear.

I.Environment

PESTEL analysis

Political: The textile industry must overcome custom barriers to import its products => it is an obstacle for a lot of firms like H&M and it represents a kind of confrontation with governments. Economic: The firm is well integrated to the global market and chooses strategic places to sell its products (big cities, malls) => In Paris, rue de Rivoli for example; and the opening of a store on the Avenue des Champs-Elysées is being negotiated.

The firm adapts its production to different consumers. H&M offers its consumers fashion and quality at best prices. In 2007, H&M has also created a new chain of stores: COS (collection of style, it is a new concept with higher prices for people earning high wages. That ability of adaptation shows that H&M can diversify its production and targets specific consumers: its factories make sportswear, masculine and feminine clothes, as well as accessories or lingerie.

The role of advertisement is extremely important in H&M’s strategy. The firm uses different ways to sell its products (stores, internet, catalogues): a huge budget is used for communication and advertisement.

There is a lot of competition on the clothing market. Zara is the direct competitor of H&M but its prices are a little higher, so H&M enjoys a real economic advantage.

H&M minimizes its production costs by building production factories in developing countries (like China, India…). The firm enjoys their foreign legislations because they authorized low wages (or lower than European legislations).

Social: The ethical aspect is one of the most important principles of H&M (inscriptions on t shirts must not be obscene, racist).

For them, protection of animals is necessary (the firm has launched important campaigns), it doesn’t sell real fur, doesn’t buy leather from India for its cruel treatment of animals. And it doesn’t import materials from disappearing species.

Moreover, H&M follows fashion and trends to satisfy its consumers and especially the teenagers. This is how the firm owns a real capacity of adaptation.
Technological: H&M also sells its products on the Internet by an efficient Websites. News is broadcasted on their Website (when a new line of clothes is launched for ex…everyone is aware of partnerships with...
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